Simulation Flashcards
(73 cards)
what is simulation
technique used in analyzing models where the value to be assumed by 1/more independant vbls is uncertain
is simulation deterministic or probabilistic
probabilistic! because the value of one or more independant variables is uncertain!!
why would u use simulation
computer model that imitates reality- iti ncorporates uncertainty into its variables
pro of simulations
allows managers to ask what-if questions without changing anything irl- just on the computer
its better to test in the simulation than irl
2 categories of simulaiton
1) monte carlo simulation
2) discrete event simulation
monte carlo simulation
repeated samplings from probability distributions of model inputs to characterize the distribution of model outputs!!
THIS IS WHAT WELL LEARN
discrete event simulation
models the dynamics and behaviour of INTERACTING elements of a system!
-> ex: physical simulations in a factory or with service flow
how can you model inventory problems
the random number generator!! this is why we need the @risk package
what is the newspaper problem?
why do we use this example?
the vendor must buy the number of papers for that day before knowing the amount of demand per day
because it is a good example of a one-time decision problem
what problems have a one time decision?
this is when you have only one chance to make a decision to order a product (ex: baked goods, seasonal products) that can be sold at a discount if u buy too much
what are costs of having too much inventory
1) material costs (purchase price)
2) handling and storage (if multiple period problem)
3) handling cost ($ tied up)
4) spoilage with potential salvage (we can maybe sell day old bakery products at 50% off)
what happens if we dont have enough inventory
OPPORTUNTIY COST= lost the chance to make profits
-> this is the implicit costs (not measured on out of pocket costs but still exist)
what are the types of costs associated with too little inventory
1) lost sales adn profit
2) lost goodwill
3) cost if a rush order to replenish (purchase & transport)
what is the green cell
distribution cell, this is the cell where input is uncertain and we USE RISK!!!
what is the yellow cell
parameter/changing cell
this is the controllable input that we vary
what is the blue cell
the output cell, the value we want @ risk to monitor
why would we use @risk
because we want to replicate uncertainty of demandw
what is the logical IF statement for storage cost
=IF(amount stocked > demand, (amount stocked-dmeand)*(storage cost),0)
if we have excess, then storage cost
if we dont hahve access, then no storage cost
what is the logical IF statement for stockout cost
=IF(amt stocked < demand, (demand-amount stocked)*(stockour cost),0)
what is the blue cell value
sum of COSTS
what is the higher cost usually= stockout or storage
stockout!!!!
it is very typical to run out of a product than to have too much
what are the 3 distributions we use in @risk
continuous: normal
discrete: posisson & binomial
what is the poisson distribution
discrete probability distribution
probability of a given number of events occurring in a fixed interval of time
if these events occur with a known constant mean rate and INDEPENDANTYL
how to run RISK
STEPS
0) SET UP THE NUMBERS!! in the white cell have your if statemetns or whatever, the blue is like the sum!!!
1) select the green cell (will be showing the uncertain values)
2) click distribution
3) click poisson
4) set lambda= desired value
5) lookk at the graph and analyze it
6) once you do this you will have a formula in the text address cell! this is good you did it good
7) toggle on the dice, this will give you a new random number, and press F9
8)click on the cell you want to run risk on (BLUE), then click on ‘OUTPUT’, and then OK
9)click iterations in the top right and run 1000 times
10) click settings and go into sampling tab, and then change the seed value
11) verify the model (CLICK ON MODEL , CHECK INPUTS AND OUTPUTS)
12) simulate!! run the simulaiton
